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North Korea-China Trade Increases

Last Updated: November 01, 2009 1:41 PM

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North Korea-China Trade Increases

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Trade between North Korea and its closest ally China is on the rise. Jason Strother traveled to northeast China several months ago to get a first hand look at the thriving cross border trade there. He tells the story from Seoul.

Trade between China and North Korea is booming.

The Institute for Far Eastern Studies in Seoul says that during the first half of this year, trade was up 25 percent compared with the same period a year ago. For the first six months of the year, trade totaled more than $1 billion.

In the Chinese town of Dandong, along the border with North Korea, almost every store on one street leading to the riverfront specializes in cross-border trade. Some sell consumer goods such as DVD players and electric fans to North Korean customers.

The Friendship Bridge spans the Yalu River and connects Dandong with Sinuiju in North Korea.

A fleet of trucks lines up at customs before crossing the Friendship Bridge.

Hu Ka-son is a Chinese businessman who has been shipping goods in and out of North Korea for four years.

He says the North Korean government and its citizens buy whatever they can here.

He says the North Koreans shop just the way Chinese do and they want many things. Often, Hu says, North Korean customers will call a friend who is here and tell them what to buy, then his company ships it over the border.

Trade between the two East Asian neighbors has become even more vital since conservative Lee Myung Bak became president in South Korea earlier this year. His government has cut back on aid to North Korea.

Daniel Pinkston is a senior analyst at the International Crisis Group in Seoul.

"So it is an important lifeline and a source of foreign exchange to balance North Korea's trade deficit, when you are talking about the investment that is coming in from China, also a source of food imports and other consumer goods and consumer products so it is quite important for North Korea," says Pinkston.

But what China wants from North Korea is different - raw resources.

Chinese companies have signed contracts to operate North Korean mines.

A review of Chinese customs reports published by the Institute for Far Eastern Studies in Seoul reveals that hundreds of millions of dollars of coal, steel and aluminum have been exported across the border this year.

"So the Chinese have been conducting this trade on a commercial basis," said Pinkston. "They will only enter into deals if it is beneficial or profitable to them."

Chinese citizens also are cashing in on their neighbor's mineral wealth.

North Korean gold sells illegally in Dandong.

It takes only a few minutes for a visitor to find someone connected to the illegal gold trade.

In one jewelry store, an employee presents a half-ounce slug of what he says is solid gold from North Korea, and quotes a price of about $500.

Jewelers say 70 percent of the gold in Dandong is from North Korea. The dealer says that people crossing the border conceal it inside belt pockets when passing through customs.

While goods go both ways across the Yalu, money does not seem to.

Bustling Dandong has become wealthy, as China has opened up its markets, allowing economic growth to lift hundreds of millions of people out of poverty.

But in North Korea state mismanagement and years of poor harvests have shrunk the economy.

The World Food Program and other aid groups warn that millions of North Koreans face famine in the coming months. During the past decade, thousands have fled to China to escape hunger and repression at home.

Just a few decades ago, Dandong and Sinuiju were said to look like twin cities. Today, the contrast between them is clear.

At night, Dandong is alive and vibrant. Children play and couples stroll down the riverfront promenade under bright lights.